METRO PACIFIC Investments Corp. (MPIC) is planning to delist from the stock exchange, as First Pacific Co. Ltd., GT Capital Holdings, Inc. and Japan’s Mitsui & Co. Ltd. announced on Thursday a tender offer to buy a minority stake in the infrastructure conglomerate.

The consortium is offering to buy out the minority shareholders owning a combined 36.6% at P4.63 per share, representing a 22% premium over the one-year volume weighted average price of MPIC’s common shares on the Philippine Stock Exchange (PSE).

The tender offer values MPIC at P133 billion in equity value.

“The bidders feel that the intrinsic value of MPIC’s core investments in infrastructure in the Philippines has not been fully reflected in MPIC’s share price for some time. The tender offer and successful delisting will allow MPIC’s minority shareholders to realize a significant premium over historical share prices of MPIC,” First Pacific, GT Capital and Mitsui said in a joint statement.

The consortium also said a delisted MPIC would be “better aligned” with their objective of investing in long-term infrastructure projects in the Philippines.

In a separate disclosure on Thursday, MPIC said its board received the tender offer notice, and approved the filing of an application for voluntary delisting with the PSE.

“Upon the successful delisting, MPIC intends to continue its business as currently conducted, particularly of owning and managing its portfolio of investments, as well as investing in other sectors of the economy, in the Philippines and other parts of Southeast Asia,” the company said.

Under the tender offer, First Pacific, through Metro Pacific Holdings, Inc. (MPHI), will spend around $90 million to increase its stake by as much as 3.8%, while GT Capital will pay $70 million for an additional 2.9% stake.

MPHI currently has a 46.1% stake in MPIC, while GT Capital has a 17.1% stake.

Meanwhile, Mit-Pacific Infrastructure Holdings Corp. will buy up to 20% of MPIC. The joint venture of Mitsui and government-led Japan Overseas Infrastructure Investment Corp. for Transport & Urban Development will become a shareholder in MPIC for the first time.

MIG, a management investment group led by First Pacific Chief Executive Officer and MPIC Chairman Manuel V. Pangilinan, will acquire up to a 10% stake in MPIC.

To comply with voluntary delisting rules, the tendered shares should cover at least 95% of its total issued and outstanding capital stock.

“The Tender Offer Notice from the bidders states that it is their intention to delist MPIC from the PSE and as such, the bidders will not accept any Tendered Shares unless the threshold for voluntary delisting is achieved or an exemptive relief is obtained from the PSE,” MPIC said.

Shareholders will have to vote on delisting from the PSE at MPIC’s annual shareholder’s meeting on June 6.

PRIVATIZATION

Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said the tender offer would not just allow minority shareholders to sell their shares at a premium, but also enable MPIC to bring in Mitsui as a strategic partner.

“The entry of Mitsui into MPIC as a strategic partner could bring significant benefits to the company. Mitsui, a multinational corporation based in Japan, has a diverse range of businesses and expertise in various sectors, including infrastructure, healthcare, and energy. Its entry into MPIC could potentially result in access to new technologies, expertise, and networks, which could help MPIC expand its businesses and improve its operational efficiency,” Mr. Arce said in a Viber message.

Unicapital Securities, Inc. Senior Equity Research Analyst Carlos Angelo O. Temporal said that Mitsui’s entry is “timely” given the market’s current cheap valuation.

“Mitsui’s expertise in global infrastructure business and its vast resources are expected to fortify MPIC’s capacity and capability to take advantage of the country’s energy transition while also providing support for the expansion of its other business segments,” he said in a Viber message.

Mr. Temporal noted that the main benefit of privatization is that MPIC would be able “to pursue a more aggressive strategy which would prop up the company’s long-term growth that would necessitate greater flexibility.”

“The growing aggressiveness is quite evident from its recent acquisitions, stakes in Axelum Resources Corp. and SP New Energy Corp., among others, as the company aims to further diversify its portfolio outside infrastructure, betting on agriculture and renewables,” Mr. Temporal said.

By going private, Mr. Arce noted MPIC management would have greater control of the company’s direction without answering public shareholders.

“Public companies are often under pressure to deliver short-term results to meet quarterly earnings expectations. By going private, MPIC could take a longer-term view and make strategic investments without worrying about how they might impact quarterly earnings,” Mr. Arce said.

However, the delisting could also have negative implications for the PSE and the investing public, said Mr. Arce.

“Minority shareholders who decide to sell their shares would have to accept the tender offer made by the major stockholders, which may not necessarily be the best value for their investments. This could result in decreased liquidity for the company’s shares and reduce transparency for investors,” he said.

“The delisting of a major company like MPIC could also have implications for the PSE as it could affect investor confidence in the exchange and the country’s overall investment climate,” he added.

MPIC sought a voluntary trading suspension on Thursday. MPIC shares closed at P4.26 on Wednesday.

MPIC is an infrastructure investment company with holdings in Manila Electric Co., Metro Pacific Tollways Corp., Maynilad Water Services, Inc., and Metro Pacific Health Corp., among others.

MPIC is one of three key Philippine units of First Pacific, the others being Philex Mining Corp. and PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.